Saturday, 26 March 2011
Stephen Dubner of Freaknomics has been intrigued by the issue of corporate succession planning lately:
Family firms in which a founder hands the business off to the next of kin tend to perform worse than equivalent non-family firms. This isn’t very surprising: what are the chances that the best person to succeed the founder just happens to be his/her son or daughter?
He finds the best position on this issue in this working paper:
It raises an interesting puzzle — family firms in Japan tend to do considerably better than elsewhere — and then delivers a fascinating answer: many family firms in Japan, rather than relying on blood progeny, adopt an adult to run the family firm. The best of both worlds, no?
Messrs Li, Lee, and Kwok should take note.